Nearly half of all children will be living in families that have to make sacrifices on essentials this Spring, like putting food on the table or replacing clothes and shoes

Over a third (34%) of households, 23.4 million people, will be unable to afford the cost of living by £8,600 on average by April 2022, according to new analysis by the New Economics Foundation (NEF) published today. This figure includes nearly half (48%) of all children, almost all (96%) of children living in families out of work, eight in 10 (77%) in single-parent households, and four in 10 (43%) in working families.

The research uses the Minimum Income Standard (MIS), which is the UK’s leading approach to measuring living standards based on need and is used to calculate the​‘real’ Living Wage paid by companies like Ikea and KPMG, and football clubs like West Ham, Liverpool and Everton.

The analysis shows that the 23.4 million people in the UK projected to be living below the MIS threshold come April will include:

• 43% of families in the north-east
• 41% in Yorkshire and the Humber
• 39% in the West Midlands
• 38% in London

The research not only shows the number of people unable to afford the cost of living in each region, but also the extent to which their incomes are falling short. In the north-east, people are missing out on a good standard of living by £8,900 a year, and in the West Midlands and London by £10,100. Couples with children will miss out on a good standard of living by £9,600 a year and single parents by £8,700 on average. This leaves families having to make impossible choices between life’s essentials, like putting food on the table or replacing clothes and shoes.

NEF is calling for the creation of a new social security system, or ​‘Living Income’, to set an ​‘income floor’ based on the MIS, which no one can fall below whether they are in or out of work. The research sets out steps for how to achieve a Living Income:

• Auto-enrolling everyone in the UK on the universal credit system so that new payments start to be processed automatically as soon as anyone becomes eligible. This would ensure the 1.3 million people missing out on payments worth an average of £7,300 a year would receive the support they are entitled to.
• Restoring the £20 uplift for universal credit and extending to all other means-tested benefits to ensure the poorest are at least made no worse off on average by recent price rises
• Investing a further £7 – 8bn in universal credit to lift families closer to the MIS.
• Uprating benefits by the latest level of inflation to ensure incomes rise alongside prices.

Sam Tims, Economist at the New Economics Foundation, said:

“The cost of living is increasing faster than at any point in recent history. While all families are set to feel a squeeze come April, the lowest income households will be hit proportionately harder.

“But the cost of living is only a crisis when people cannot afford it and government support must be able to flexibly respond to this. There is little time left for the chancellor to take action to avert the worst real-terms incomes squeeze in 50 years.”

Contact

Becky Malone, becky.malone@neweconomics.org, 07925950654

Notes to editors

The analysis is available here.

The New Economics Foundation is a charitable think tank. We are wholly independent of political parties and committed to being transparent about how we are funded.

To measure the cost of living we use the Minimum Income Standard (MIS) as calculated by Loughborough University’s Centre for Research in Social Policy. Household budgets for different family types are calculated based on what the public thinks is needed for an acceptable standard of living. We can then compare these budgets to people’s incomes, creating an accurate picture of how many people will be unable to afford the cost of living.

Using the latest Bank of England forecasts and Office for National Statistics data on inflation for different items we have estimated the value of the MIS for April 2022 using budget breakdowns from the MIS in 2021. We base our inflation on the Bank of England’s forecast of 7% in Q2, but account for the 54% increase in the energy price cap.

Nearly half of all children will be living below a socially acceptable standard of living
Households below MIS by family type

Note: NEF analysis of the Family Resources Survey using the IPPR tax-benefit model, our 2022 MIS estimate is based on Bank of England forecasts and the upcoming energy price cap increase. 2019 figures taken from Households below a Minimum Income Standard: 2008/​09 – 2019/​20

People in London and West Midlands will experience a deeper gap in income and cost of living
Number of people and average amount under the minimum income standard (MIS) by region

Note: NEF analysis of the Family Resources Survey using the IPPR tax-benefit model, our 2022 MIS estimate is based on Bank of England forecasts and the upcoming energy price cap increase.